The stock outperforms all the benchmarks

A CLEAR STRATEGY AND AN ATTRACTIVE, REMUNERATIVE DIVIDEND SUPPORT THE STOCK PRICE

IGD has outperformed the Italian stock exchange and the benchmarks since the beginning of the year. Despite the very uncertain market environment and the generalized decline in the stock markets, IGD continues to be supported by company-specific factors, above all the company’s solid fundamentals.  The good economic-financial results also increase the visibility of the dividend which is a cornerstone of IGD’s equity story.

The institutional investors who have met with Company management in the reporting period are interested, above all, in understanding IGD’s financial sustainability and environmental performances. IGD responds with very detailed disclosures which focus, firstly, on the three-year Business Plan, to then explain the ongoing updates relative to the ESG performance: clear and transparent information, data, and messages which have proven to be part of a winning strategy that has been rewarded in the uncertain context in which today investors must make their decisions.    

Let’s learn more about this analysis from Claudia Contarini, head of the Investor Relations team.

Source: Italian Stock Exchange and EPRA data compiled by IGD

 

In this very negative environment for the stock markets, IGD’s stock price has undergone a correction since the highs reached last April. The stock, however, continues to outperform the benchmarks. How do you explain this phenomenon?

In the generalized sell-off that hit the global stock markets indiscriminately, IGD’s stock also fell after reaching a high of €4.65 on 20 April, an increase of around 20% against the beginning of the year, to test a low of €3.44 on 16 June and then return to trade in a range of between €3.5 and 3.7. If we look at the chart comparing the performance with the Italian index and the European sector indices, it’s clear that IGD’s stock managed to defend the advantage gained during the rally seen in March and April. In our view, this strength is attributable to the convincing annual and quarterly results which confirmed economic-financial performances that were in line with the new Business Plan 2022-2024, published in December 2021. The dividend of €0.35 that IGD paid on 11 March was also consistent with our equity story, focused on the dividend yield.

 

Which factors caused the huge sell-offs seen on the stock markets?

The geo-political tensions caused by the Russia-Ukraine conflict and the severe lockdown implemented in China to eliminate Covid-19 contagion which caused supply chain bottlenecks and caused inflation to rise quickly. In order to keep consumer prices under control, the central banks adopted restrictive monetary policies which resulted in immediate interest rate hikes and higher borrowing costs for both businesses and families. Investors then began to fear that the real economies, which were recovering from the profound crisis caused by the pandemic, would begin to slow to the extent that we could be risking a new recession. In this backdrop, as investment funds had to deal with client redemptions, there were “forced” sales which penalized stock prices across the board.

 

In light of the very negative sentiment that weighed on the financial markets, did anything change in the meetings held with investors in the first part of 2022?

The uncertainty of the overall context and the persistence of the restrictions needed to avoid contagion clearly reduced the number of meetings held, above all in the first few months of the year. During the first half we did, however, meet with 32 institutions, including six asset managers whom we met for the first time. The latter were interested in learning more about IGD given the very low multiples at which the stock continues to trade despite its healthy fundamentals. The Investor Relations team also participated, along with the Finance Division, in the roadshow held in March 2022 to prepare for the next bond issue during which IGD met with a total of 33 additional investors.

 

What were the main topics discussed during the most recent meetings with investors?

The questions we receive are focused mainly on the impact that macro-economic issues could have on our business, in general. More specifically, our counterparties want to understand how IGD is reacting to the new scenario and with what results. In this sense the fact that we published an updated Business Plan last December has been very helpful: we have, in fact, stated very clearly how we view the new environment and what we intend to do from a commercial standpoint, as well as in terms of asset management and financially.

 

More specifically, what indicators are they interested in?

At this particular moment in time, investors are very focused on the sustainability of our rents and the occupancy rates. The doubts that some investors had about the ability of the shopping center to survive the threats of e-commerce and the new trends that emerged during the pandemic have, at this point, waned thanks to the operating performances reported in the last few quarters: the current goal now, therefore, is to understand the short-term results that IGD will achieve in this current phase. Since our operating philosophy has always been shaped by a long-term vision, we are able to provide this sort of projection thanks to the detailed data and actions included in our Business Plan which also leverages on aspects related to sustainability. In the last few months there have, in fact, been a lot of questions about our environmental performance. Toward this end, we are very pleased that we have been invited to participate in the Italian Sustainability Week which will be held at the Italian Stock Exchange on 7 September where we will have the opportunity to meet with investors specialized in managing their portfolios based on ESG criteria and leverage on the detailed sustainability metrics that we have developed over time.

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